The Productivity Blog

Metrics, Schmetrics

The debate about standardization of human capital analytics is kicking into high gear as SHRM forges ahead with its initiative
to standardize HR and Human Capital metrics and critics - including the
lobbying group HR Policy Association (HRPA) - takes pot shots at the
plan, which includes the development of a template with which companies
would report the information to shareholders. The ball on this
initiative began rolling back in 2009 when American National Standards
Institute (ANSI) designated SHRM as a Standards Developing Organization
(SDO). Critics say this is a cynical move on SHRM's part to justify its
existence and that standardization could wind up constituting a
Sarbanes-Oxley-esque reporting nightmare.

Poll: HR Metrics Standardization Poll

Are you in favor of standardization of HR & human capital metrics, even if it means mandatory reporting?

Yes

No

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i4cp's Cynical CEO argued back in May
of this year that SHRM is over-reaching, big-time. “Here's a suggestion
for SHRM and my HR department: before attempting to show your value to
investors, how about you successfully prove to me that you can impact
the bottom line? Heck, I'll make it even easier - just prove to me that
you understand our business.” While we think metrics are great, they
also highlight the fact that for most organizations, HR remains a major
cost center rather than a profit-generating function. And the idea of
yet another anvil over our heads in terms of more reporting requirements
makes us less than giddy.

HR blogger Kris Dunn wrote this week
that in “creating a platform that threatens to standardize, and
therefore require, the collection of data and reporting of metrics along
the lines of financial metrics to Wall Street, there's the predictable
‘give me freedom or give me death' call related to an implied threat
that these metrics could be included in future regulatory burdens.”

HRPA, whose membership includes the senior HR leaders at more than 300
of the largest companies in the U.S. agrees, pointing out that such
standardization and reporting requirements would in effect bury public
companies already burdened with truckloads of Sarbanes-Oxley paperwork.
And requiring companies to make public such information as the resources
invested in hiring and training will have other consequences, such as
placing them at a competitive disadvantage.

While critics such as Dunn question whether or not SHRM is even the
right organization to lead such an initiative, there is acknowledgement
that those who pine for standardization can't have their cake and eat it
too. “Seems like folks like me should either get involved and help
determine the solution or stop complaining like the HRPA is doing,” Dunn
wrote. Standardization may make sense in theory, but we need to be
careful what we ask for. Moreover, we need to first get our priorities
straight. In the words of the Cynical CEO, “I want to put our best foot
forward when engaging investors. I don't want to scare them away by
showing that HR is a money pit.”

Comments

I am a member of the SHRM Measures & Metrics Task Force and the workgroup on Investor Metrics, so I speak with first hand knowledge. While I remain skeptical about the ultimate outcome, this is a constructive process. I encourage you to join the Task Force and become actively engaged in the process.

A second draft of the Investor Metrics proposal will be released shortly for public comment. There are significant changes from the first draft, in direct response to the comments that have been submitted.